Tobacco Global Policy Overview Tobacco History Social Costs

Tobacco: Global Policy

Overview • • • Tobacco History Social Costs of Tobacco Consumption Social Benefits of Tobacco Production Global Tobacco Trends Effects of Socioeconomic Policies Conclusions and Recommendations

Tobacco History

Tobacco Timeline • 100 BCE: indigenous Americans began smoking tobacco • 1492: Christopher Columbus discovered tobacco smoking in America and brought it to Europe • 1500: tobacco smoking was introduced to the Middle East via Turkey • 1530: tobacco was introduced to China • 1560: the Portuguese and Spanish shipped tobacco to Africa • 1612: tobacco was grown commercially for the first time • 1788: tobacco was introduced to Australasia with the first fleet from Europe

Modern Tobacco Consumption • The principle mode of tobacco consumption in the West has changed as follows: – 18 th century: snuff – 19 th century: cigars • The switch from snuff to smoking tobacco was partially made possible by the invention of phosphorous friction matches in 1833 – 20 th century: cigarettes • In 1881 the cigarette machine was invented • In 1901 Imperial Tobacco and the British American Tobacco Company were formed – These are two of the biggest cigarette producers today

Tobacco Legislation and Research Timeline • 1633: Turkey institutes death penalty for tobacco smoking • 1939: American scientists discover a link between tobacco smoking and lung cancer • 1981: Japanese researchers report on dangers of second hand smoke • 1987: State of Victoria (Australia) institutes the first tobacco tax to establish a health foundation countering tobacco • 1993: South Africa passes the Tobacco Products Control Amendment Act

Social Costs

Healthcare • Cigarette consumption is at higher than socially optimal level • Overall annual healthcare cost attributed to smoking 6 -15% of total healthcare costs • High-income countries: 6% GDP • Low- and middle-income countries: 2% GDP (World Bank)

The Environment • Deforestation • Pesticides and herbicides • Soil depletion and erosion

Social Benefits

Employment • Total Industry: 60 million employed – Manufacturing: 1. 2 million • 840, 000 are in China, India and Indonesia • More labour intensive in developing world • Higher salaries than similar industries – Growing: 38. 9 million • 31 million are in developing countries • Global average female earnings are 78% of male earnings – Home industries: 20 million

Production and Exports • Over 6. 3 billion tonnes of tobacco is produced annually – 5. 7 billion tonnes is produced in 7 countries: • China, India, Turkey, Indonesia, S. Korea, Pakistan and Japan • Annual earnings from exporting tobacco is over $21 billion • For some developing countries tobacco represents a large percentage of export earnings: – – Malawi: 58% Zimbabwe: 32% Macedonia: 16% Kyrgystan: 8%

Biotechnology • The tobacco plant is useful to biotechnology: – Tobacco generates biomass quickly – The tobacco genome is relatively easy to manipulate – Much of the genome has be sequenced due to research by tobacco companies • Bioremediation is a promising potential new use for tobacco plants

Net Loss • According to the World Health Organization, net social loss (social benefit minus social cost) for the tobacco industry is: “US$27. 2 million for every additional 1000 tonnes of tobacco traded in the global market”

Tobacco Trends

Tobacco Consumption • From observation of world maps of cigarette consumption there are low levels of cigarette consumption in: – South America – Africa – South Asia • There are high levels of cigarette consumption in: – – North America Central and East Asia Europe Australasia

Economic Indicators • There is a higher percentage population of smokers in developed countries than in developing countries • The percentage population of smokers in a country is not tied to: – GDP – Taxes – Level of cigarette production

Agriculture • In countries where there is a higher than average percentage population of smokers, a higher proportion of agricultural land will be devoted to tobacco crops

Tobacco Legislation • Countries that spend more per capita on public health care have stricter tobacco legislation – These countries have a slightly lower percentage of smokers – Smokers in countries that have stricter legislation smoke fewer cigarettes

Price of Cigarettes • The number of cigarettes smoked per smoker is correlated to the price of tobacco • Tobacco is an elastic good

Price of Cigarettes • Countries that produce more cigarettes are likely to have lower taxes on cigarettes • Like most natural resources, the real price of Tobacco has been decreasing since the 1960 s

Socioeconomic Policy

Barriers to Trade • International trade agreements moving towards reducing trade barriers • Increased trade = increased smoking – High-income versus low-income – Liberalized trade versus closed market • Cigarette consumption increase of 10% • GATT has provisions to protect public health if applied to domestic and foreign products

Subsidies • • • Direct price support or indirect input subsidies Example: European Union, India, Turkey Prices high and stable Support for small family farms Control imports of tobacco from abroad to conserve foreign exchange • Maintain political support • Encourage tobacco production and thus tobacco consumption

Taxes • Cost-effective policy instrument – Tax Revenue – Burden on high-income versus low-income – Tax has positive correlation with social policies • Tobacco tax would allow poor people to “live better, work cheaper, and to send their goods cheaper to market” (Smith, 1776) • Is there an optimal tobacco tax level?

Social Policies • Information shocks – Turkey: 8% decrease • Advertising ban – High-income countries: 6% decrease • Counter-advertising – Sweden: 11% decrease • Smoking restrictions • Function of tax

Conclusions and Recommendations

Conclusions • Framework Convention on Tobacco Control (WHO) • Tax increases are a highly effective way to reduce tobacco consumption – High-income versus low-income countries • Social policies are also effective and can be funded using a portion of tobacco tax revenue – Health risk issues

Recommendations • Global tobacco policy should be implemented based on shared principles • Multi-pronged approach: – Raising taxes – Disseminating information – Banning advertising and promotion – Restricting smoking by location

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